Arab Shah Construction Company

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of -- )

)

Arab Shah Construction Company ) ASBCA No. 61565

)

Under Contract No. W912ER-l 7-A-0005 )

APPEARANCE FOR THE APPELLANT: Mr. Mohammad Idrees

Director

APPEARANCES FOR THE GOVERNMENT: Michael P. Goodman, Esq.

Engineer Chief Trial Attorney

Michael E. Taccino, Esq.

Aimee L. Rider, Esq.

Engineer Trial Attorneys

U.S. Army Engineer District, Middle East

Winchester, VA

OPINION BY ADMINISTRATIVE JUDGE YOUNGER ON THE

GOVERNMENT'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

UPON WHICH RELIEF CAN BE GRANTED

Appellant Arab Shah Construction Company (appellant) has appealed from the

Army Corps of Engineers' (Corps') decision to terminate its contract for cause. The

Corps has moved to dismiss the appeal for failure to state a claim upon which relief

can be granted, arguing that appellant's complaint did not explicitly dispute the

termination or make a specific request for relief. We deny the motion.

STATEMENT OF FACTS FOR PURPOSES OF THE MOTION

1. By date of December 7, 2016, the Corps awarded Contract No. W912ER-17-A-0005

(contract) to appellant for diesel generator repair services at power plants located throughout

Afghanistan (R4, tab 3 at 1, 4} Under the contract, identified as a blanket purchase

agreement, the Corps would issue orders for appellant to perform the contracted services

(gov't mot. at 1). The contract referred to those orders as "calls" (R4, tab 3 at 1, tab 4 at 1).

2. The contract included FAR 52.212-4, CONTRACT TERMS AND CONDITIONS

COMMERCIAL ITEMS (MAY 2015). Subparagraph (m) of that clause provides the

government with authority to terminate a contract for cause "in the event of any default

by the Contractor, or if the Contractor fails to comply with any contract terms and

conditions, or fails to provide the Government, upon request, with adequate assurances

of future performance." That subparagraph further provides that "[i]f it is determined

f

f

that the Government improperly terminated this contract for default, such termination

shall be deemed a termination for convenience." In a separate subparagraph, the

clause provides that "the Contractor shall be liable for default unless nonperformance

is caused by an occurrence beyond the reasonable control of the Contractor and

without its fault or negligence." FAR 52.212-4(f). (R4, tab 3 at 49)

3. By date of December 15, 2017, the Corps issued a cure notice advising

appellant that its performance under Call 0003 (Call 3) was deficient and "endangering

performance under the subject contract" (R4, tab 48 at 1). The cure notice included a

detailed timeline describing the problems encountered with appellant's performance

on three generators located at two different power plants (id. at 2-5). The cure notice

further directed appellant to respond in writing to the contracting officer within

10 days with a schedule of actions it would take to remedy its deficient performance,

and to provide a list consisting of manufacturer verification of part and/or serial

numbers for the replaced parts (id. at 5).

4. By email dated December 20, 2017, appellant submitted a 48-page response to

the cure notice that consisted primarily of photographs of various items appearing to be

parts that were to be installed during contract performance (gov't mot. at 2; R4, tab 49).

The response briefly described certain actions appellant had either already taken or

intended to take, and asserted that with respect to one of the generators, the contractor

responsible for maintenance was not changing the generator's oil in a timely fashion or

using good quality oil, which impacted its performance (R4, tab 49 at 8-10). Appellant's

response also included a chart that listed parts and part numbers (id. at 47-48).

5. In a memorandum for record dated December 29, 2017, the contracting

officer documented her decision to terminate the contract for cause under

FAR 52.212-4 for failure to adequately respond to the cure notice (R4, tab 127 at 1-3).

By letter of the same date, the contracting officer issued the termination notice, finding

appellant in default "for failure to include a feasible recovery schedule of actions

[appellant] will take to remedy its deficient performance" with respect to two of the

three generators identified in the cure notice, and for failure to provide the parts list

verifying part and/or serial numbers for parts replaced in the generators (R4, tab 2 at 1).

6. The termination notice described the problems with the two generators

in substantial detail. With respect to the first generator, the notice described a

turbocharger "glowing red hot" and continuing to overheat even after appellant

replaced three fuel injectors. The notice also stated that the Corps had photographic

evidence showing that replacement parts installed on that generator were not

"authentic OEM" (original equipment manufacturer), and that appellant was using

parts with no identifiable serial or part numbers. With respect to the second generator,

the notice indicated that appellant failed to present a realistic timeline to turn the

generator over to the end user and failed to identify and validate the replacement parts.

2

The notice further stated that photographic evidence indicated that appellant was

re-using parts instead of replacing them with new parts, which could impact the

generator's ability to provide sustained use, and that there "is no evidence this

generator was turned on or could take any sort of load." (Id at 1-2)

7. By email dated March 24, 2018, appellant filed its notice of appeal with the

Board, and attached a copy of the termination notice. The notice of appeal described

in detail certain problems appellant encountered with performance, and quoted and

specifically responded to the performance deficiencies identified in the termination

notice. The notice of appeal also repeated appellant's contention that the maintenance

contractor's failure to properly maintain one of the generators was responsible for the

performance deficiencies, and included a copy of the parts list provided in its response

to the cure notice.

8. By email dated April 18, 2018, appellant filed its complaint with the Board.

The complaint included some unrelated discussion of Calls 1 and 2; with respect to

Call 3, it stated that another contractor "was creating problems" for appellant by not

allowing it to start work. The complaint further stated that this other contractor

claimed that one of the generators was covered by its contract with the Corps, not

appellant's, and that the other contractor had stolen some of that generator's parts.

(Compl. at 1-2)

9. The complaint also referenced a number of attachments consisting of emails

and email chains between appellant and various Corps representatives, in which it

raised concerns with respect to the other contractor (whom appellant identified as the

maintenance contractor). In a February 20, 2017 email, appellant informed the Corps

that the maintenance contractor would "not [allow] us to start the work they claimed

they will fix it and it's on their contract." The February 20, 2017 email also noted that

when appellant raised this issue with Corps representatives its complaints were

ignored. Appellant repeated its contention regarding the maintenance contractor

"creating these problems" in an email dated March 9, 2017. In two additional emails,

dated October 7 and October 11, 2017, appellant informed the Corps that the

maintenance contractor was not properly changing the oil and filter on one of the

generators.

DECISION

The Corps has moved to dismiss this appeal for failure to state a claim upon

which relief can be granted, arguing that appellant has "neither set forth a recognizable

claim nor claimed entitlement to any relief' (gov't mot. at 3). Appellant opposes the

motion, repeating its contention that the maintenance contractor denied it access to the

site and failed to properly perform its maintenance obligations (app. opp'n at 1-3).

3

l

·.I

}

I

I

The standards for deciding a motion to dismiss for failure to state a claim upon

which relief can be granted are well established. A motion to dismiss for failure to

state a claim can be granted where the facts asserted in the complaint do not entitle

the claimant to a legal remedy. See Lindsay v. United States, 295 F.3d 1252, 1257

(Fed. Cir. 2002). The complaint must allege facts "'plausibly suggesting (not merely

consistent with)' a showing of entitlement to relief." Cary v. United States, 552 F.3d

1373, 1376 (Fed. Cir. 2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

557 (2007)); American General Trading & Contracting, WLL, ASBCA No. 56758,

12-1 BCA ,r 34,905 at 171,640. In ruling on such a motion, we "must accept

well-pleaded factual allegations as true and must draw all reasonable inferences in

favor of the claimant," Kellogg Brown & Root Sen1ices, Inc. v. United States, 728 F.3d

1348, 1365 (Fed. Cir. 2013), and decide "only whether the claimant is entitled to offer

evidence in support of its claims, not whether the claimant will ultimately prevail."

Matcon Diamond, Inc., ASBCA No. 59637, 15-1 BCA ,r 36,144 at 176,407. The

scope of our review is limited to considering the sufficiency of the allegations set forth

in the complaint, "matters incorporated by reference or integral to the claim, items

subject to judicial notice, [and] matters of public record." A&D Auto Sales, Inc. v.

United States, 748 F.3d 1142, 1147 (Fed. Cir. 2014) (alteration in original) (internal

quotation marks and citation omitted); see Zak v. Chelsea Therapeutics Int 'l, Ltd,

780 F.3d 597,606 (4th Cir. 2015) (On a motion to dismiss for failure to state a claim,

courts may consider documents attached or incorporated into the complaint.).

Although the Corps describes appellant's complaint as failing to explain its

allegations or request any actual relief (gov't mot. at 2), "the primary document setting

forth the claim is not the complaint, per se, but is either the contractor's claim or the

government's claim, the latter asserted in a contracting officer's final decision as

required by the Contract Disputes Act." Lockheed Martin Integrated Systems, Inc.,

ASBCA Nos. 59508, 59509, 17-1 BCA ,r 36,597 at 178,281. Thus, in addition to

appellant's complaint, we look to the Corps' December 29, 2017 termination notice.

See Jurass Company, ASBCA No. 51527, 06-1 BCA ,r 33,186 at 164,503 (termination

for cause is a government claim).

Read in conjunction with the termination notice, appellant's complaint alleges

sufficient facts '"plausibly suggesting (not merely consistent with)' a showing of

entitlement to relief." See Cary, 552 F.3d at 1376; American General Trading &

Contracting, 12-1 BCA ,r 34,905 at 171,640. The Corps' termination notice describes

I

in detail the problems encountered with the generators covered by Call 3 (statement 6).

Appellant's complaint incorporated the emails submitted as attachments, in which it

specifically communicated to the Corps that the maintenance contractor was

interfering with its access to the site and was not properly changing the generator's oil

and filter (statements 8-9). A contractor's default may be excused "if it is caused by

Il

..

,,

an occurrence that is beyond its reasonable control and without its fault or

4 I:

i

negligence." Earthstar Constn1ction and Logistics Company, ASBCA No. 58086,

13 BCA 135,461 at 173,901; see statement 2. Appellant's allegations regarding the

problems it encountered with the maintenance contractor, and the impact of those

problems on its performance, go to the question of whether its alleged performance

deficiencies can be excused.

With respect to the Corps' claim that appellant's complaint failed to request any

form of relief, the Corps has not cited, and we are unaware of, any precedent requiring

an appellant's complaint to recite a specific request for relief. The Board's rules, like

the Federal Rules of Civil Procedure, only require notice pleading. UniTech Services

Group, Inc., ASBCA No. 56482, 10-1 BCA 134,362 at 169,695. By virtue of

filing its notice of appeal, it is clear that appellant did not agree with, and was

challenging, the Corps' decision to terminate its contract for cause. Under the

contract's terms, "[i]f it is determined that the Government improperly terminated this

contract for default, such termination shall be deemed a termination for convenience."

FAR 52.212-4(£); see statement 2. Although appellant did not explicitly request the

termination for cause be converted to a one for convenience, that form of relief is a

logical inference from appellant's decision to file this appeal.

CONCLUSION

The government's motion is denied.

Dated: February 12, 2019

Administrative Judg ___

Armed Services Board

of Contract Appeals

I concur

RICHARD SHACKLEFORD OWENC~SON

Administrative Judge Administrative Judge

Acting Chairman Vice Chairman

Armed Services Board Armed Services Board

of Contract Appeals of Contract Appeals

5 f

I

I certify that the foregoing is a true copy of the Opinion and Decision of the

Armed Services Board of Contract Appeals in ASBCA No. 61565, Appeal of Arab

Shah Construction Company, rendered in conformance with the Board's Charter.

Dated:

JEFFREY D. GARDIN

Recorder, Armed Services

Board of Contract Appeals

6

l